SUBJECTS: Labor’s dairy announcement, dairy industry crisis.
MICHAEL ROWLAND: Bill Shorten will this morning announce his party's plan to introduce a minimum milk price for dairy farmers if Labor wins power. It comes two days after supermarket giant, Woollies, says it will stop selling one dollar a litre milk. Shadow Agriculture Minister Joel Fitzgibbon joins us now in Parliament House in Canberra. Joel Fitzgibbon good morning.
JOEL FITZGIBBON, SHADOW MINISTER FOR AGRICULTURE, FISHERIES AND FORESTRY AND SHADOW MINISTER FOR RURAL AND REGIONAL AUSTRALIA: Good morning Michael.
ROWLAND: So a Labor Government would try to bring about a farm gate milk price. How would that happen?
FITZGIBBON: Well I’ve come to the conclusion Michael that not only is the dairy industry in trouble, it’s past time we have some Government intervention. The whole industry is in trouble. This is not a war between dairy farmers and processors for example. Processors aren’t making money either so farmers are losing money, processors are struggling and the retailers are choosing not to make money from milk as part of their marketing campaign. The situation is growing worse. Milk production is down year on year and farmers are culling their cows and farmers are leaving the land and if we’re not careful, we will be importing powdered milk from another country.
ROWLAND: You’re talking about Government intervention, but practically how would that work?
FITZGIBBON: Well we are going to ask the ACCC to look at a proposal to set a minimum farm gate milk price and I’m going to the ACCC not to ask them why we can’t do this but to tell us how we can do this and we would have a regionally based minimum price because every region is different so a body like the ACCC or some other independent body will assess the cost of producing a litre of milk in any given region in any given time period and then make a recommendation as to what should be the minimum price a farmer receives for that litre of milk. Now they have been paid under cost for too long and sometimes at cost but certainly not paid at a rate which is sustainable for them and their families.
ROWLAND: Who would bear the cost of that? Would the processors?
FITZGIBBON: Well we will ask the ACCC to make some assessments about this. There are obviously a number of things that could happen. It could be absorbed by the processor, it could be absorbed by the supermarket which would be my preferred outcome that the retailer absorbs it and somehow defrays that cost across its retailing chains. It might be that no one is forced to absorb because we have market failure here. The system is broken; and if you are going to address productivity and sustainable profitability in the sector, then you have got to start with the foundation of making sure that your dairy farmers are here to stay and they are viable. If you can do that, then you can start working on further productivity improvements in the farm sector. So you may be able to achieve a win win. A better deal for the farmers without necessarily imposing costs on others.
ROWLAND: You are talking about retailers, realistically though what prospect is there of any of them, as you say, absorbing these high prices?
FITZGIBBON: Well I have been having conversations with the retailers. But what we don’t want to do, as Minister Littleproud has fallen into the trap of doing, is start a war between retailers, processors, farmers. In any sector, we get outcomes if we have every point of the value chain working optimally, lifting productivity across that value chain. So we should really be working together. My recent conversations with the big retailers, they appear prepared to work with us to meet that productivity so that everyone wins.
ROWLAND: OK, just on that, what do you make of Woolies’ recent move to up its $1 a litre milk price by 10 cents and also, Coles and Aldi not following suit at this stage?
FITZGIBBON: The Woolworths’ move can only help because they are going to collect and send it back to the farmers. It would not work if they just put a levy on it, with an expectation that the levy would somehow make its way back through the value chain to the farmers. That would not work. It is a welcome thing and I would be very pleased if other retailers follow, but it is not a solution to the structural issues in the industry. We need to address those structural issues and improve productivity across the supply chain. There is no good just sitting back as a government expecting the market to work out these things for itself. It is clear that is not going to happen. We have waited too long for that. It is clear we are waiting with false hope. So we need to intervene, but we are not just talking about a minimum price: we are going to put into place a mandatory code of conduct to govern behaviour in the industry; we are going to drive energy prices down with some energy policy that returns investment certainty to the energy sector; and we are going to introduce a farm productivity and sustainability plan which helps again make a contribution towards getting the latest innovation out onto the farm to help farmers lift their productivity.
ROWLAND: Further details of that announcement today, Joel Fitzgibbon thanks so much for joining us on News Breakfast today.
FITZGIBBON: A great pleasure.